Oil hits six-week low as OPEC fails to curb oversupply


The upshot of all of this is as obvious as it will be disheartening to petrostates: the oil market will swing further into oversupply next year.

This implies that crude oil price, which stood at $48.27 per barrel, last week, would increase to $51 per barrel or more, signalling a good omen for Nigeria, which depends on crude oil for its fiscal responsibilities.

The oil research firm noted that the considerable drop in Brent futures prices, soon after the OPEC's meeting in May 25, this year, was mainly caused by an extension of the production cuts, and high level of speculation in the market.

The International Energy Agency is forecasting US output to grow by 620,000 bpd in 2017, compared with a prediction that production would be flat in its November assessment.

Global energy demand grew by 1 percent in 2016, a rate similar to the previous two years but well below the 10-year average of 1.8 percent, BP (BP.L) said in its benchmark Statistical Review of World Energy on Tuesday.

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Oil prices plunged almost 4% on Wednesday after the U.S. Energy Information Administration said that crude oil inventories fell by 1.7 million barrels in the week ended June 9, disappointing expectations for a decline of around 2.8 million barrels. A rise in U.S. crude oil exports could have also contributed to the fall in inventories. U.S. benchmark West Texas Intermediate rose 0.56 percent, trading at $44.71 per barrel.

The US Energy Information Administration (EIA) said gasoline inventories increased by 2.1 million barrels during the week ended June 9, while crude inventories decreased by 1.7 million barrels. Data from the American Petroleum Institute showed on Tuesday that US crude stocks rose by 2.8 million barrels in the week to June 9 to 511.4 million, compared with expectations for a decrease of 2.7 million barrels. New supplies from OPEC rivals will be more than enough to meet demand growth next year, the International Energy Agency said Wednesday in its first forecast for 2018.

OPEC's crude oil production target will remain at 32.5 million barrels per day through the end of the first quarter of 2018, the EIA said.

Energy services company Baker Hughes said last Friday that USA drillers last week added rigs for the 21st week in a row, the longest such streak on record. Production rose by 12,000 barrels a day to 9.33 million barrels per day.